You may have noticed the term “Native Advertising” in the news lately. Investors seem to love it, the FTC warns that it may be illegal, and Google seems to be playing both sides of the fence.

So, what are native ads?

A promoted Pin on Pinterest

Native advertising is a form of paid media where the advertising mimics the natural form and function of the user experience in which it is placed.

In other words, the advertisements are designed to look and function like the primary content on the site. Examples of this are promoted tweets on twitter, promoted pins on Pinterest, and advertorials on blogs. These obviously impact the User Experience (UX) and must be a primary consideration when building or modifying a site. How you incorporate native ads is an essential issue. Although you would like to blend ads into the existing content as much as possible, you don’t want to run afoul of FTC regulations on deceptive advertising, and right now, there are a lot of sites doing just that.

According to a report by Hexagram based on a survey of 1,000 publishers, brands, and agencies:

Over 60% of the surveyed publishers offer native advertising placements.

The most popular forms of native advertising include:

blog posts (65%)*

articles (63%)

Facebook (56%).

*Percentages represent the number of responding publishers who use this form of native advertising on their sites.

The problem arises when the native ads aren’t clearly marked as ads. According to Reuters, an FTC survey of publishers found that 73% are already using native advertising. In the report, it states that it may be illegal in many cases, and warned that ads must be clearly marked. FTC Chairwoman Edith Ramirez wrote:

“While native advertising may certainly bring some benefits to consumers, it has to be done lawfully. By presenting ads that resemble editorial content, an advertiser risks implying, deceptively, that the information comes from a non-biased source.”

Google appears to be of two minds on the matter depending on the division responding to the question. Google’s guru of web spam, Matt Cutts stated in a corporate video for publishers that “A good rule of thumb is that there should be clear and conspicuous disclosure,” and that publishers should mark paid-for-content with “Advertisement” or “Sponsored” to clarify the issue for their users. At the same time, Neal Mohan, who handles the display advertising division stated,

“Recently, “native formats” have emerged as an important new model. They provide new types of brand experiences, like sponsored stories, that are unique to each publisher. We are investing in models like this to connect advertisers and publishers in a meaningful way, which we believe also creates real value for users. In the coming months, we’ll be developing this technology and in making it seamless for publishers who want to have flexibility in implementing native formats and making the most of them on their properties.”

But is native advertising actually a “new model”? Within the print publishing arena, advertorials are the original “native advertising.” They mimic the look and feel of a magazine’s editorial style, but are a paid placement. The FTC eventually required labeling with wording such as “special advertising section” or “advertorial” on these ad placements to keep from defrauding readers. Various spins on the advertorial have since emerged, such as Featured Product or New Product sections, some of these are genuinely editorial in nature, while others are nothing more than a glorified classified ad.

If you’re worried about marking the ad as an ad don’t be. A recent series of studies has shown that even when clearly marked as an advertisement, a significant percentage of the population (>30%) do not recognize the ad as an ad. Clearly, UX designers are charged to incorporate native advertisements into their sites without using any of the techniques, which the FTC is specifically targeting as fraudulent. These would be “promoted” tweets, posts, likes, and pins that are not clearly marked as advertisements. Whether the word “promoted” will pass the FTC’s scrutiny is still under review. Since “promoted” could refer to an upgrade in viewing position due to popularity, it is not clear that its use would qualify as “clear notice” that the item is actually an advertisement.

One form of “native advertising” that is in clear violation of FTC requirements on user notification is that of the unmarked advertorial. Advertorials are advertisements that are written to look like a site’s editorial content, however unlike a true editorial which is a review by or opinion by an author or editor; an advertorial is a paid placement by the person, or company, about whom it’s written. An advertorial that is designed into a site as though it is a standard post is considered deceptive and misleading, and could eventually lead to a fine by the FTC. The FTC requires clear notice to the user that the advertorial is actually paid content.

“Native advertisement” is a new term for a practice that has been in use for decades. It is important for designers to clarify the user’s experience in such a way that advertisements are visually integrated into the site, while at the same time, clearly identified as paid content.